DentistsPractice Purchase
Illustrative planning scenario — not an actual client. This example is hypothetical, created for educational purposes, and does not represent guaranteed results. Individual circumstances vary; always seek professional tax, legal and insurance advice before acting.
Client Profile
A dentist in his early 40s who has associated at the same clinic for eight years and has been offered the chance to buy the practice when the owner retires.
The Situation
The purchase price would be structured as a mix of goodwill and equipment, funded partly through a practice-purchase loan. With two young children and a mortgage already in the picture, he wanted to know whether buying now made sense — and what it would mean for the rest of his finances.
What He Initially Wanted to Solve
Whether he could afford the loan payments on top of his current household and practice-related expenses.
What Made It More Complicated
The deal structure — an asset purchase vs. a share purchase — hadn’t been settled yet. That decision affects who’s responsible for the corporation’s existing liabilities, how goodwill is treated for tax purposes, and how existing and new insurance should be held.
Planning Priorities
- Build a personal and corporate cash flow projection under the proposed loan terms
- Confirm disability coverage would replace enough income to service the loan and household expenses if he couldn’t work
- Review whether life insurance needed to increase to cover the acquisition debt
- Keep enough flexibility to adjust if the final deal terms changed
A Coordinated Planning Approach
- Modelled cash flow across both the proposed asset-purchase and share-purchase structures
- Obtained preliminary quotes for loan-sized life and disability coverage, contingent on the final deal structure
- Coordinated timing with the accountant and lawyer so coverage could be placed once the structure was confirmed
- Reviewed existing personal policies to see what could be adjusted rather than replaced
Professional Coordination
- Accountant — deal structure and tax implications
- Lawyer — purchase agreement and corporate documents
- Lender — financing terms for the practice purchase
- Financial planner — protection review and cash flow coordination
Important Considerations
- Financing approval and insurance underwriting both depend on individual circumstances — this is not a loan or insurance guarantee
- Tax treatment of a practice purchase depends on the final structure and should be confirmed with an accountant
The financing and the protection plan need to be built together — not bolted on after the financing is already signed.
Related Service: Learn more about our Financial Planning for Dentists services.
